The revival of Alitalia: The scandal and expectations
Alitalia Airbus A330-200 | Photo Credit: Simone Previdi via Shutterstock
You can think of Alitalia when you want to fly to Italy. Since being in service from 1946, servicing an average of 21.5 million passengers a year and flying to nearly 100 destinations, plus being the largest airline in Italy both by Fleet and Passengers Flown. As the national icon of Italy, Alitalia is unique with its iconic branding and focuses on being Made of Italy. Its unique name blends the Italian words ali (wings) and Italia (Italy), similar to spoke (fork and spoon). Based on my recollection, this is the only airline that has a portmanteau name.
Even though being an icon to Italy, have you seen the headlines with Alitalia ... "Alitalia Is Beginning The Process Of Filing For Bankruptcy" ... "Alitalia Employees Vote On Liquidation Over Pay Cuts & Layoffs". What do you think is going on? Well its a long story but I will try to keep it short. We are going to start from 2006 to the present day.
European Union Vertical Flag | Photo Credit: Sara Kurfeß via Unsplash
The European Union: the Divorce attorney for Airlines and Government Control
Well, as you can expect the header above, Alitalia had some issues that lead to some of its crazy history recently, which impacts made by EU law. With Alitalia reported only one year of profit, which was in 1998. Since its foundation in 1946, only one profitable year and reported net losses of more than €3.7 billion between 1999 and 2008. Alitalia has been getting State Aid using Italian Tax Payers money to support the airline.
But due to the "beautiful power" of the European Union, regulations forbid airlines being owned by the government (state ownership) and prohibit governments from bailing out airlines. This leads to Alitalia becoming an independent company, with the government relinquishing its management roles in the airline.
In August 2008, Alitalia went bankrupt and went into Extraordinary Administration. Between 2008 to January 2009, Alitalia's Administrators made calls for expressions for anyone who would like to purchase Alitalia. Compagnia Aerea Italiana or CAI, for short, a consortium investment company, presented a binding offer of €1,100 million on October 30, 2008, to acquire parts of the airline. With some of Alitalia Pilots and Flight Attendants unions refused to sign the rescue proposal, both the Italian government and the bankruptcy administrator agreed to the CAI takeover offer on November 19, 2008.
With the proposal, all of Alitalia assets would be transferred to CAI on December 12, 2008, when CAI paid the offered amount. With the acquisition into Alitalia, CAI was also acquired Air One, another bankrupt Italian airline.
Alitalia Logo (2009 - 2016) | Photo Credit: Alitalia
Thanks for Flying the New Alitalia
So on January 12, 2009, Alitalia ceased operations and restarted operations on the same day as Alitalia - Compagnia Aerea Italiana SpA. With Alitalia restarted operations, the airline updated their logo from Saatchi & Saatchi. The following day on January 13, 2009, CAI announced it would sell 25% shares to the Air France-KLM group, which cost €322 million. With the reluanched airline, the new Alitalia would be leasing all of its aircraft and would not own any of them. CAI also acquired the old Alitalia fleet but was sold or decommissioned since the airline's relaunch. The airline's first year saw 22 million passengers flown.
But things changed its path when the airline employees announced would go on a four-hour strike over wages on February 1, 2010. This would be the first strike of Alitalia employes since the relaunch. Since 2012 Alitalia proposed mergers with two Italian Airlines, Blue Panorama and Wind Jet. Even though Italian antitrust authority allowed Alitalia to acquire Wind Jet, it would have to make exceptions if the merger occurs. The exceptions to allow the merge would require Alitalia to give up specific slots on domestic routes. The plan would be later be dismissed in August 2012.
In late 2013, Alitalia would be facing bankruptcy once again, five years after the relaunch. This was due to the loss of a major fuel supplier and a potential grounding by Italy's civil aviation authority. With those issues to occur, the airline announced a €500 million rescue package, which will include a €75 million investment by the Italian Post Office.
In June 2014, the aviation news woke up to the announcement of Abu Dhabi, UAE national airline, Etihad Airways, would purchase a 49% stake from CAI into Alitalia. The announcement came from when Etihad wanted to invest and help struggling airlines. Some airlines like the recently defunct Air Berlin and Jet Airways, plus airlines like Virgin Australia and Aer Lingus. Both Alitalia and Etihad made the partnership very bold. It started with the Expo 2015 in Milan as both Alitalia and Etihad having a joint pavilion and joint livery design. During the time with Italy's hosted Expo in Milan, it was official that Etihad would improve Alitalia.
Alitalia + Etihad = “Strong Partnership”
Alitalia to restarted operations once again on January 1, 2015. The airline changed its registration name to Alitalia - Società Aerea Italiana SpA. On January 20, 2015, Etihad live-streamed a press conference in Milan with Alitalia Executives to discuss the future of Alitalia. You can see the live stream from the Right of this paragraph.
In discussing the future of Alitalia, James Hogan, the then President and CEO of Etihad Aviation Group, and the former vice-chairman of Alitalia talked about issues with the civil aviation industry. It was proposed to modify Alitalia as a Global airline that gives customers more options to travel, Enhanced products, and focus on cost reduction in its services. Alitalia chairman Luca di Montezemolo stated the following on the priority of Alitalia.
“Our priority is to put the customer at the centre of everything we do. And to do that, we will change many things, starting with the way we work. We need to work as one united team to achieve this great common goal.”
- Luca di Montezemolo, Alitalia Chairman
Etihad Airways and Alitalia Cabin Crew with James Hogan, President/CEO of Etihad Airways (Center Left); Luca di Montezemolo, Alitalia Chairman (Center); and Silvano Cassano, Chief Executive Officer of Alitalia (Center Right) at January 20, 2015, Press Conference.
The plan include cargo service, preserve the icon to be stable, create more jobs in Italy, and focus on delivering the best service to the people of Italy. Silvano Cassano, then Chief Executive Officer of Alitalia, talked about the future of Alitalia, rebranding the airline focused on New Products, new network, and connectivity for the airline. Even though the press conferences was to introduce the new Strategie plan for Alitalia. It was not a formal press conference with the introduction of the latest products; its proposal focuses really on Reinventing the Airline.
Months later, into Alitalia restructure, Silvano Cassano stepped down from his role as CEO with Alitalia. Some were questioning the airline's uncertainty, but showing new changes with appointing Cramer Ball as the new CEO. Even with a shift in leadership, Alitalia moved forward with its new Brand Campaign, Made of Italy.
Made of Italy: Alitalia a step foward or Alitalia a step backwards
With the official launch of the airline's new brand and keeping its promise as the new Alitalia moves forward as an Icon of Italy, on May 18, 2016, Alitalia welcomed Made of Italy. A new approach and focuses on showing Alitalia's new side in its Global Campaign. With a new Logo designed with a car gloss gradient, a new livery with its modern Eurowhite design, and a new uniform design based on Alitalia's colors. The event also launched the new products onboard, including new modified services to show Alitalia's modern and unique look.
One of several ads from Alitalia with the new Uniforms to promote the new Alitalia campaign | Photo Credit: Alitalia
“Italy is the embodiment of beauty, warmth, passion, hospitality and a way of life celebrated the world over. It is an undisputed leader of style and innovative design. The Alitalia of today, as a national symbol, is imbued with the finest qualities for which this country is famous. It is with this spirit that we introduce our new global brand campaign, starting with a television commercial which presents the best of Italy and the importance that the country enjoys on the world stage.”
- Cramer Ball, Alitalia Chief Executive Officer
With the airline focuses on reaching customers, the campaign ads, even the video ads have been seen around the world. Alitalia continues to service with new updates. With a year, things came worse for Alitalia in 2017. Since the brand overhaul reports where being made about Alitalia proposal to change the fleet size and to announce pay cuts and layoffs to keep a steady flow of money in the airline.
As a majority of Alitalia employees were against the proposal, the board approved another plan. The new proposal was to reduced the pay cuts by 8% and reduced the number of layoffs. That proposal was eventually voted no once again. According to one mile at a time, all of these talks about pay cuts, layoffs, reduction cam from a Business Proposal in mid-March of 2017, which the Alitalia board approves a business plan. The proposal key facts where ...
€1 billion cost reductions by 2019
Revenue to increase 30 percent by 2019
Profitability by 2019
Fleet reduced by 20 narrow-body aircraft
New competitive proposition for short and medium-haul aircraft fleet
Some people being surprised that these plans would "help" the airline. On May 2, 2017, Alitalia filed for Administration again, and Etihad Airways Backed out of supporting the airline. Since the decision to go into bankruptcy and with Etihad, a key shareholder with 49% shares into the airline, left and no longer supported the airline financially. Somewhere now, wondering about the future of Alitalia.
Back to 2009, Not really
Ok, why did I referred this section as "Back to 2009, Not really". It's to show that Alitalia is back to where they were in 2009 with an Extrdinatory administration and with finding a new shareholder. During the bankruptcy proceedings, Alitalia changed its logo from its car gradient design to flat logo design (nothing fancy) based on the 2016 logo. The airline also changed; they're uniforms and covered everything up relating to Alitalia with Etihad. Alitalia cover-up looks like they were embarrassed about their partnership with Etihad.
Since then, Alitalia opened up for call for expression to acquire the airline. While that occurred, the Italian government gave financial aid loans to the airline as they did when they were bankrupt before the 2009 relaunch. The events of lending and support from the Italian government came with politics being involved with any decision making. Even investigations from the European Union once again. With the calls for expressions came in left to right from airlines like Delta, China Eastern, Lufthansa, EasyJet, and Ryanair, plus the Italian national rail company, Ferrovie Dello Stato Italiane. The plans for acquisition always been delayed or could not meet expectations.
Competitions and reality.
While Alitalia was playing Doctor and Patient with the Italian Government, Alitalia was being threatened by their neighbors in Sardinia; Meridiana was being acquired by Qatar Airways with a 49% stake, similar to Alitalia and Etihad. Which lead to Meridiana rebranding as Air Italy, operating out of Milian and saying it would be the true flag carrier of Italy. Even at the airline launch press conference, even telling the press, "we are the only airline in Italy that does not need restructuring." However, that plan derailed as on February 11, 2020, Air Italy declared liquidation after two years of service. You can learn more about Air Italy in my previous post by clicking here.
Air Italy Boeing 737 MAX 8 | Photo credit: Brandon Farris via Airways Magazine
With that, Alitalia was back in the public eye as everyone is wondering will Alitalia survive. With Air Italy being shutdown and with the Italian Civil Aviation Authority suspending Ernest Airlines, another Italian Airline in Italy, Alitalia was the concern of a collapse of the Italian Aviation Industry. Now yes, there are two other Italian airlines sill in service: Blue Panorama and Neos, but really who cares about them. Their are a small airline that no one knows about, and they won't ever be the top airline as their market and plan dose not meet what a flag carrier is.
As the world is currently being affected by the Coronavirus (COVID-19) Epidemic, the aviation industry hit the most. People saw a surprise from the Italian government. In April 2020, it was announced that Alitalia would return to be owned by the Italian government. Most people were surprised. Now, with the announcement that Alitalia will be owned by the government again, questions were asked what would the future of Alitalia be in the coming weeks.
As the report was announced that Alitalia would be relaunching in June 2020, and as its next week, we really don't know what will happen. Besides the announcement that Alitalia will reduce its fleet to 90 aircrafts and with Italy's Industry Minister, Stefano Patuanelli, announced on April 23, 2020. The minister outlined what we, as the customers, should expect from the "new" Alitalia. One Mile at a Time states from the Reuters report ...
The government will create a new company at the beginning of June that will take over 100% of the airline
The new airline will start with a fleet of more than 90 aircraft, compared to the current 113 aircraft; previous reports suggested the new airline could have just 30 planes, but that's not the case
The new airline will work with unions to make sure as many people stay employed as possible
It's undecided as of now whether the airline will remain under government control long term, or only until they get to the point where they can find a buyer
Alitalia is considering leaving SkyTeam for another alliance (especially now that they've been kicked out of the transatlantic joint venture), though we'll see if that actually happens
With that to occur, Stefan Patuanelli mentioned the following …
"Until now Alitalia has been a crystal vase among steel vases. The new company will kick off in the same position as other airlines once the sector restarts."
- Stefano Patuanelli, Italy's Industry Minister
We all can envision a good future for Alitalia. But what would that be like? Well, we should see new routes connecting passengers in and out of Italy. My recommendation for Alitalia to continue to use Rome Leonardo da Vinci–Fiumicino Airport as the main hub. Then announce focus cities in Milian, Naples, Palermo, Florance, and Olbia. This will give much "territorial bases" to show Ultra Low-cost carriers Easyjet and Ryanair, who their up with at the main Airport in Italy.
Alitalia Tail Fins with a Ryanair B737 flying after take off | Photo Credit: BBC News
For aircrafts, we already know that Alitalia will reduce its fleet to 90 aircrafts. In my opinion, they should just operate an all-Airbus Fleet. I recommend in 5 years, Alitalia should have in their fleet Airbus A320, A321, and A330. Keep it Simple, and maybe the airline can introduce the A320neo, A321neo, and even the A350-900xwb.
We really don't know what the onboard experience would be for Alitalia. But in my opinion, for Onboard experience, Alitalia needs to adjust services. For the A320 and A321, they really don't need seatback entertainment unless Alitalia thinks so. I like seatback entertainment, but for the circumstance of Alitalia, have the customer BYOD (Bring your own device) and utilize free WiFi. With the use of new technology, the free WiFI would allow passengers to stream movies and tv shows by the Alitalia app or stream their own favorite apps on their device. For the A330, a new seatback entertainment system should be updated and utilize new technology. Also, apply free WiFi on the aircraft so customers can enjoy surfing the internet on a flight for 8 hours.
Other services, like meals, are also a question. My opinion for Meals, Alitalia, should keep a Bi-Monthly Menue for customers. Every two months, Alitalia would be able to change the menu to meet the airline's needs. Meals should continue to be based on the Italian Culture but also much elaborated with a new presentation module.
Overall the airline needs to also work with new partners. Report Alitalia may leave SkyTeam and may partner with Lufthansa and join Star Alliance. In my opinion, Alitalia should leave SkyTeam, and Alitalia should stay on their own for the time being. Commence more codeshare agreements and partnerships. Worry less about Alliance for the time being. Already the Italian Government officially gave Alitalia €3 billion in state loans. Also, Alitalia, for the first time, in my opinion, has finally reached an agreement with unions to furloughed 6,622 employees through October 31, 2020. In my opinon we may see this time a better reluanched Alitalia and who knows maybe 10 years from know alitalia would have 300 aircrafts and alot of money.
